By now everybody, even those without interest in economics at all, will have heard of the commodities rally of the last months. Lack of confidence in the stock markets, in the health of bank's finances, the fear of a worldwide double-dip recession, currency wars, political near-conflicts around the globe... (more on these subjects on future posts) all have contributed to the price rise of most of the physical commodities, specially metals.
Traditionally the classic commodities have been precious metals like gold, silver, platinum and to a lesser extent, palladium. Not only they have an inherent value because of their relative scarcity, but they are also widely used in industry so they serve their wealth reserve purpose very well. Lately we have seen how "purely industrial" metals like copper, aluminum, titanium and molybdenum have joined the classics on this rally with quite interesting growths too. The good part is that all of the commodities named above are obtained from mines spread around the world, which helps to maintain a kind of equilibrium in their valuation.
Rare-earth elements
This is not the case for rare-earth elements (see Wikipedia), as China is responsible for the 97% of today's rare-earth production. It does not take much to see why this is a problem when these elements are critical in industries like fiber-optics, wind turbines, home electronics (your iphone is included), hybrid cars, magnets in general... even night-vision goggles use them!
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| Source: wikipedia |
